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High-Speed, High-Quality Compliance ProductsFri, 12 Oct 2018 18:42:36 +0000en-US
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1 https://wordpress.org/?v=5.2.379405680Petrobras Fined $1.78 Billion for FCPA Violationshttp://blog.espear.com/petrobras-fined-1-78-billion-for-fcpa-violations/
Fri, 12 Oct 2018 18:42:36 +0000http://blog.espear.com/?p=1777Read more >]]>Recently, Brazil’s state energy company, Petrobras, was investigated by the Department of Justice (DOJ) and the Securities Exchange Commision (SEC) for FCPA violations related to political bribes in Brazil. According to the SEC’s Steven Peikin, Petrobras fraudulently facilitated money through a “massive, undisclosed bribery and corruption scheme.” The company confessed to the bribery and stated that their executives did not comply with internal financial and accounting controls. This fraudulent behavior and lack of due diligence led to millions of dollars being laundered into Brazilian politics.

The DOJ finalized their investigation with Petrobras last month with a non-prosecution agreement and the SEC settled with an internal administrative order. Through the DOJ settlement, Petrobras will pay $853.2 million in criminal penalties and $933.5 million in disgorgement for a total of $1.78 billion, which is the biggest FCPA enforcement action to date.

The resolution in Brazil was signed as a consent agreement with Ministerio Publico Federal (MPF) and, per the settlement agreement, 80% of the fine ($682.5 million) will be put into a special fund in Brazil to be used in specific circumstances in accordance with the terms and conditions of the agreement. Under the US class action, Petrobras agreed to pay $2.95 billion. The company believes this agreement will terminate any risky activity or behavior, ultimately lowering costs of potential litigation in the US.

]]>1777$88.6 Million Laundered Through Crypto Exchangeshttp://blog.espear.com/88-6-million-laundered-through-crypto-exchanges/
Wed, 10 Oct 2018 20:37:09 +0000http://blog.espear.com/?p=1770Read more >]]>A report conducted by the Wall Street Journal (WSJ) has revealed that $88.6 million worth of illicit funds have been channeled through 46 various cryptocurrency exchanges with $9 million alone being funneled through the Switzerland-based exchange, ShapeShift.

According to WSJ, criminals used ShapeShift in order to remain anonymous and convert Bitcoin (BTC) into Monero, which is an untraceable cryptocurrency. Erik Voorhees, CEO of ShapeShift, told WSJ in an interview that he does not believe “people should have their identity recorded to catch an occasional criminal,” leading to the suggestion that ShapeShift allowed the transactions of these illicit funds to continue under the guise of protecting their client’s anonymity. With help from investigations conducted by BTC and Ethereum, the WSJ was able to develop a software program that tracked the funds from 2,500 potential blackmail schemes, frauds and other crimes that were collected from 50 of the most recent ShapeShift transactions posted every 15 seconds. The list of suspicious addresses created using this program was given to ShapeShift and later on banned from the platform. Veronica McGregor, Chief Legal Officer at ShapeShift, stated the company’s plans for requiring user identification data to be collected starting last week.

]]>1770Former Pakistan Government Official Suspected in Money Laundering Casehttp://blog.espear.com/former-pakistan-government-official-suspected-in-money-laundering-case/
Tue, 09 Oct 2018 18:07:55 +0000http://blog.espear.com/?p=1763Read more >]]>Former Pakistan government official, Farhan Junejo, who was arrested by the National Crime Agency (NCA) after the Federal Investigation Agency (FIA) alleged that he had laundered approximately Rs 180 to 250 million, has been released after the FIA failed to connect the money to corruption or other illicit crimes.

When Junejo served as Director to Makhdoom Ameen Faheem, former Minister for Commerce in Pakistan for the People’s Party from 2009 to 2012, the FIA strongly believed that Junejo utilized his government position in order to acquire and accumulate huge assets through corrupt practices and laundered the illicit funds from Pakistan to Dubai and into the accounts of his family members.

Farhan Junejo is currently under investigation by the NCA, however as requested by the Pakistan government, cannot be charged by police and will instead be charged by the Crime Prosecution Service (CPS).

]]>1763New Zealand Makes New Amendments to Fight Money Launderinghttp://blog.espear.com/new-zealand-makes-new-amendments-to-fight-money-laundering/
Thu, 04 Oct 2018 13:55:18 +0000http://blog.espear.com/?p=1754Read more >]]>New Zealand introduced new amendments to its Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Amendment Act 2017 (Phase 2) in an effort to prevent money laundering, terrorist financing and increase the difficulty for criminals to profit from illicit activities. New Zealand’s government estimates that approximately NZ$1.35 billion is laundered every year with the proceeds coming from fraud and the drug trade.

The new amendment requires all financial institutions to provide information on clients who make cash transactions over NZ$10,000 and international monetary wire transfers out of the country that are greater than NZ$1000 to the Police Financial Intelligence Unit (PFIU). Accountants and other institutions outside of the financial sector accepting or distributing large amounts of money into New Zealand will also be required to confirm client identities, perform risk assessments, and report suspicious transactions to the PFIU. Accounting firms will now be liable to report suspicious transactions after a grace period ending October 1, 2018. In addition, the new laws under Phase 2 of the Act will expand to cover more entities including conveyancers, real estate agents, numerous lawyers and accountants, and businesses involving wagers on sports and races.

Deputy secretary policy for New Zealand Ministry of Justice, Rajesh Chhana, stated her hopes for the new amendments to strengthen and keep anti-money laundering (AML) laws effective while keeping the impact on businesses small. However, 2compli co-founder, John Parker, believes businesses will greatly be impacted depending on the size of the business, customers, services and so on. Parker stated “The legislation will have a bigger impact on accountants whose business operates within areas susceptible to money laundering and finance of terrorism. This includes any areas that promote anonymity, such as trusts, limited partnerships, and charities.”

]]>1754Ireland’s Growing Money Laundering Riskshttp://blog.espear.com/irelands-growing-money-laundering-risks/
Thu, 04 Oct 2018 13:54:46 +0000http://blog.espear.com/?p=1728Read more >]]>In the past few years, Ireland’s technology and financial sectors have soared, with the country’s economy and job markets growing as well. However, with the increase in activity also comes an increase in the risk for money laundering.

In 2017, Irish authorities prosecuted 42 money launderers, which is double the amount reported in 2016 alone. Additionally, compared to the number of suspicious transactions reported in Ireland in 2012, the number doubled in 2017 to 24,000 suspicious transactions reported by Irish banks and financial institutions.

In order to prevent potential money laundering, Ireland needs to ensure that all financial institutions, including companies that deal with financial transactions, are fully compliant with anti-money laundering (AML) regulations, including transaction screening for potential illicit activities. This may be a challenge for some of Ireland’s current AML systems that are outdated and cannot handle the time-consuming screening process because they don’t rely on a more modern platform that integrates artificial intelligence and machine learning that make for a more efficient screening system.

Irish banks and companies must work diligently to keep up with advancing technologies and AML regulations because the more AML technology advances in order to make money laundering more difficult and easier to detect, the harder criminals will work the find a weakness in the system.

]]>1728ING Reaches $900 Million Settlement for AML Violationshttp://blog.espear.com/ing-reaches-900-million-settlement-for-aml-violations/
Wed, 26 Sep 2018 13:25:35 +0000http://blog.espear.com/?p=1736Read more >]]>An Amsterdam-based bank, ING Group NV, became involved in a U.S. Securities and Exchange Commission (SEC) investigation for having shortcomings in the execution of preventative measures against financial crimes. This includes requirements for client on-boarding, anti-money laundering (AML) regulations, and prevention of corrupt practices. However, ING won an SEC declination one day after the bank reached a settlement with Dutch Authorities. The SEC believed that based on the cooperation and information provided, it will not be recommending an enforcement action against ING.

ING agreed to pay a fine of $782 million and disgorge $115 million for the resolution of criminal investigations into lax business practices, totaling $900 million. The CEO of ING, Ralph Hamers, apologized, saying that the bank is regretful of its apathetic performance as a gatekeeper to the financial system and not meeting the standards necessary to fight financial crime. With the SEC’s conclusion of the investigation, the bank will no longer be penalized, but ING will still pay the $900 million to the Dutch Public Prosecution Service.

]]>1736Sanofi Pays $25.2 Million in FCPA Resolutionhttp://blog.espear.com/sanofi-pays-25-2-million-in-fcpa-resolution/
Tue, 25 Sep 2018 19:07:20 +0000http://blog.espear.com/?p=1739Read more >]]>The SEC charged big pharma company, Sanofi, for violating the FCPA’s books and records and internal accounting controls provisions, and allegedly paying bribes across the Middle East and in Kazakhstan to gain more business opportunities.

Sanofi had their sales people create the money for bribes by submitting fraudulent travel and entertainment reimbursement claims, pooling the money and distributing it as bribes to expand the number of Sanofi product prescriptions. The company bribed officials in public hospitals and clinics in Jordan, Lebanon, Syria, Bahrain, Kuwait, Qatar, Yemen, Oman, and the United Arab Emirates between 2011 and 2013. These kickbacks were generated to ensure that Sanofi was awarded tenders and the payments were tracked on internal spreadsheets coded as “marzipans.”

Sanofi has agreed to pay $25.2 million to resolve these charges but did not admit or deny to the findings. The company will pay a civil penalty of $5 million, $17.5 million in disgorgement, and $2.7 million in prejudgment interest.

There are still significant risks in the pharmaceutical industry and bribery is a major problem in connection with sales. Charles Cain, Chief of the SEC’s FCPA unit, believes that more work needs to be done to address this issue in the pharmaceutical industry.

]]>1739A Loophole for Money Launderers: Real Estatehttp://blog.espear.com/a-loophole-for-money-launderers-real-estate/
Mon, 24 Sep 2018 21:45:50 +0000http://blog.espear.com/?p=1733Read more >]]>Real estate is often used to aid money launderers in the Integration stage of a money laundering scheme. Criminals are able to invest their illicit gains into property, which provides stability in prices that usually appreciate over time and functionality that allows launderers to use the property as a second home or rent it out in order to build additional income. Additionally, the reporting requirements on real estate regarding suspicious activity are very minimal as opposed to the high anti-money laundering (AML) compliance regulations that financial institutions must adhere to, leaving launderers with little risk of getting caught.

In real estate transactions, large sums of money are able to be moved in a single transaction especially when purchasing real estate in expensive markets such as New York or Miami. Moreover, lawyers wouldn’t necessarily be quick to raise a red flag towards transactions where the buyer has significant funds in a shell company with a hidden beneficial owner because legally earned money is often used to purchase real estate in entirely-cash transactions by buyers who simply wish to keep their business dealings private. Some lawyers may raise an alert for due diligence purposes, but many don’t see it as an ancillary task.

Due to the lack of oversight in real estate within the United States, money laundering is difficult to catch and leaves room for criminals to scheme a way around the system. However, if a case implicates an offshore account or company, the US government can ask international officials to probe into the behavior. Unfortunately, foreign officials may not respond in a timely manner or even at all. Without due diligence of governments and officials, the illicit activity will persist and allow criminals to sneak through the cracks of the AML regulatory structure.

]]>1733Thailand Fights Against Cryptocurrency Money Launderinghttp://blog.espear.com/thailand-fights-against-cryptocurrency-money-laundering/
Thu, 20 Sep 2018 21:21:13 +0000http://blog.espear.com/?p=1721Read more >]]>At the Legal System and Cryptocurrency Crime seminar held in Bangkok last month, officials of Thailand’s Anti-Money Laundering Office (AMLO) revealed their plans to create a cryptocurrency wallet that will have the ability to seize digital currencies from criminals accused of cryptocurrency crimes based on distributed ledger technology (DLT).

Currently, Thailand has no laws allowing authorities to seize or even freeze digital assets of criminals. As a result, AMLO only has the power to jail or extradite the criminal, and only seize physical assets while the digital assets remain untouchable. Thai authorities faced the same problem earlier this year when, in a joint operation with the Technology Crime Suppression Division of the Royal Thai Police and Dutch authorities, the digital assets of a Moldovan citizen, who was accused of operating a child pornography website, could not be seized.

Although Thailand has proper infrastructures in place for initial coin offerings (ICOs) and DLT, crimes related to cryptocurrencies are still on the rise. Chartpong Chirabandhu, deputy director of the Thai Department of Special Litigation, Office of Attorney General stressed the need for regulations enabling authorities to collect digital evidence which can be used in court against criminals. Chirabandhu stated, “A big problem with the cryptocurrencies and other such evidence is the difficulty in discovering the identity of those transacting. When we present evidence to the court, it often fails to convince the Judge.” Pol Colonel Pisal Erb-Arb, deputy commander of the Narcotics Suppression Bureau also suggested creating a task force that focuses on cryptocurrency based crimes before digital crimes in Thailand rise even further.

]]>1721Money Laundering in Southamptonhttp://blog.espear.com/money-laundering-in-southampton/
Tue, 18 Sep 2018 13:49:19 +0000http://blog.espear.com/?p=1712Read more >]]>Robert P. Hoopes, former Lower Southampton Director of Public Safety, has pleaded guilty to one count of conspiracy to commit money laundering and four counts of Hobbs Act extortion. Hoopes is accused of accepting a bribe and extorting business owners while he was in office, and is now waiting to be sentenced on December 17th for a potential maximum of 100 years in federal prison.

In the past, Hoopes faced similar charges, including honest service fraud, money laundering and witness tampering in a 2015 federal investigation while he was working as a Lower Southampton conflict attorney. In 2016, Hoopes was then hired as the director of public safety but was fired less than a year later in December after being indicted on money laundering charges involving John Waltman, Lower Southampton District Judge, and Bernard Rafferty, former state deputy constable. All three men were accused of laundering $400,000 worth of funds stemming from drug trafficking and health care fraud which they received from undercover agents in 2015 to 2016. Hoopes and Waltman were also accused of being connected to a pay-to-play scheme, where the two men accepted bribes from business owners and conspired to fix a traffic ticket for an undercover agent. Hoopes’ guilty plea leaves Waltman the only defendant scheduled for a jury trial where he faces charges of money laundering, conspiracy, honest service mail fraud, honest wire fraud, and Hobbs Act extortion. Rafferty is awaiting sentencing after he admitted, in March of 2018, to helping Waltman and Hoopes launder money through a consulting business and the traffic ticket scheme.

Former Credit Union Manager, Kevin Biederman along with Robert Degoria, former digital sign salesman and Michael Savona, former Lower Southampton solicitor are also tied to the case with similar charges. Biederman admitted to using his position at the Philadelphia Federal Credit Union to create fake documents facilitating the money laundering operation and DeGoria admitted to lying to the IRS and FBI in relation to financial business with Hoopes and Waltman. Sanova admitted to lying to investigators about his knowledge of the $10,000 bribe DeGoria paid to Hoopes and Waltman. These three men are currently awaiting sentencing as well.